The European Commission Expert Group’s Take on Standard-Essential Patents: A Short Commentary for a Long Report

By Igor Nikolic & Niccolò Galli (European University Institute)

European policymakers are seeking to improve the legal certainty, reliability and transparency of the standard-essential patent (“SEP”) licensing framework, as evidenced by several reports and communications over the recent years. In 2017, the European Commission committed to setting up an expert group (“EG”) to monitor SEP licensing markets and gather information on the internet of things (“IoT”) industries practices. In January 2021, the EG published a Report examining the challenges of SEP licensing in the IoT. This paper analyses the EG proposed reforms and comments on their suitability in the IoT licensing context. Overall, two major trends could be identified. One is the move towards greater clarity on the SEP landscape by knowing the number of truly essential SEPs, having more detailed and specific SEP disclosure and ensuring stronger validity chances of granted SEPs. The second is the move towards greater collective industry actions – from agreeing on aggregate royalty rates for a standard for different product categories, agreeing on the levels in the supply chains for licensing SEPs to formation of patent pools and implementer licensing platforms. While these are steps in the right direction, the implementation in practice remains contested. Following the Report structure, this paper first sketches the hotly debated IoT SEP licensing issues. Second, it addresses the EG’s SEP transparency proposalsand advanced value chain licensing principles. Then, it reviews the structural reforms on FRAND terms and conditions and on SEP licensing negotiation. Last, the paper deals with patent pools and other collective SEP licensing negotiation proposals before concluding by summing up the findings and paving the way for future discussion.

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